Global policy at the zero lower bound in a large-scale DSGE model

Ricardo Mestre, João Sousa, Pascal Jacquinot and Sandra Gomes

No 1254, Working Paper Series from European Central Bank

Abstract: The purpose of this paper is to analyse whether fiscal policies can alleviate the effects of the zero lower bound (ZLB) on interest rates and if they should be coordinated internationally. The analysis is carried out using EAGLE, a DSGE model of the global economy. We consider that the fiscal shocks are temporary and that fiscal policy retains full credibility at all times. In this setup we find significant non-linearities in a ZLB situation that amplify the effects of fiscal shocks compared to the non-ZLB case. International coordination is helpful but does not play a major role in the results. JEL Classification: E40, E62, E63, F42

Keywords: DSGE models; Fiscal Moultipliers; monetary policy; zero lower bound (search for similar items in EconPapers)
Date: 2010-10
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mic and nep-mon
Note: 334659
References: View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Global policy at the zero lower bound in a large-scale DSGE model (2015)
Working Paper: Global policy at the Zero Lower Bound in a large-scale DSGE model (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101254

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